My turn: Mining pays its way

Posted: Tuesday, December 16, 2008

By FRANK BERGSTROM

On Dec. 9, Dave Atcheson's My Turn enumerated the "inequity" between the mining and oil and gas industries in that mining doesn't pay as much tax. Therein, Atcheson mentioned his kindly neighbor, who allowed his "spouting off" regarding the "insane" Pebble copper mine project. In contrast, oil and gas appears to be the White Knight. And indeed it is. What other industry could afford to pay 90 percent of state government expenses? Answer - none.

Oil and gas is an exceptional industry for our state. Oil frees the citizens of this great state from income tax and state sales tax or any other kind of tax, plus pays cash dividends. Go gas line!

Nonetheless, mining pays its way. State and local taxes are paid to offset direct and indirect costs of mining developments: that is, the expenses for communities to provide services such as schools, hospitals, streets, police and sewers. Going above and beyond the norm, Red Dog is the cash cow for the Northwest Arctic Borough, paying all borough expenses. Greens Creek has been annexed by the city of Juneau to increase borough revenues. Fort Knox pays for its impacts on Fairbanks and surrounding communities, and has provided high-paying work to hundreds.

Oil and gas has higher margins (profits) than other industries. That is, it has lower costs per unit of revenue. Mining has higher costs per unit of revenue, and the biggest cost is labor. Mining makes jobs - good jobs. Oil does too, just not as many for a given level of investment.

The disconnect is understanding how anything can compare to oil and gas tax revenues. Do fishing or tourism pay such high tax revenues to the state, or do they just employ people? I think the latter. Does government pay tax revenues, or does it just employ people? Certainly not the former, but definitely the latter. Does any other Alaska industry pay taxes like the oil and gas industry, or can they? The answer is no.

The margins in the oil and gas industry are unique. Other industries are the norm; oil and gas is the exception. Oil and gas pay taxes that the government then uses to create its own government jobs. Most industries employ people directly and pay sufficient taxes to offset the burdens they place on society. That is what industry is supposed to do: employ people. Fewer and fewer are doing that in this country, but are instead sending jobs overseas. Mines employ people at the mine - right here at home.

Atcheson hypothesizes that mines will eventually be a mess, requiring government money for cleanup, and he cites the Mining Law of 1872 as an example of poor environmental regulation. What? The Mining Law of 1872 deals with locatable land rights. All our environmental laws, including the Clean Water Act, Clean Air Act, Resource Conservation and Recovery Act, Endangered Species Act, Historic Preservation Act, Coastal Zone Act, reclamation laws and others apply to mining as they do to all our other industries.

Does the mining industry have a good environmental record in the state of Alaska? Just ask your neighbor. I have discussed such things with my neighbor. My neighbor is a humble man who listens with interest and offers only good will in return. If you talk to your neighbor in towns such as Kotzebue, Fairbanks, Juneau and many others, your neighbor may well be a miner. We in Juneau have the Greens Creek Mine, with the Kensington Mine waiting in the wings. Those are thousands of neighbors.

Thoughtful neighbors will weigh the rhetoric of Atcheson as hyperbole. They will also value their neighbors who work for our mines and contribute to our communities. I congratulate the oil and gas industry that it can uniquely pay enormous taxes and still turn a profit. Mining does provide the best and highest paying jobs in the state without placing a net burden on society. Miners are your neighbors who are willing to listen and be neighborly. Every day they are treating the environment with the respect and honor we have come to assume from our neighbors. What greater criterion should be placed on any industry?

 Frank Bergstrom is a Juneau resident with 30 years experience in environmental management of mining operations, permitting new mines and reclaiming old mines.